What is a Good Credit Score to Buy a House?

People looking to buy property often have thousands of questions running through their mind. But one of the most common is, “What is a good credit score to buy a house?” That’s because the better your score, the lower your interest rates. So, the less you will pay in the long run.

There are many rating systems, but FICO is the one most often used by lenders. Your FICO score can range from 300 to 850. But what makes an excellent credit score and what is considered poor?

Let’s take a look at where you fall and what options are available to you when buying a house.

Excellent Credit Score

As a general rule, an excellent credit score is anything above 760. If you’re above that marker, congratulations, you can get the best financing terms available when borrowing money.

An excellent credit score will mean you will get the lowest interest rates around. In the long run, you could end up saving thousands of dollars on your mortgage repayments.

As the FICO website says if you are looking to buy a property with a $216,000, a 30-year fixed-rate mortgage you could be looking at an interest rate of 4.2%. That’s a monthly repayment of $1,057. But what if your score isn’t as high?

Good Credit Score

A good credit score is anything above 660. With this score, you should still be able to find a loan, but you will be paying a higher interest rate.

Taking our example from earlier, a score of 665 could secure an interest rate of 4.82%. That would make monthly payments of $1,135.

It’s worth trying to improve your numbers before you start your applications. You can improve your credit score in a number of ways. Here are two options:

Removing a recent late payment. The most effective method is to call the creditor and request a goodwill adjustment. If that fails, you could negotiate the removal by signing up for automatic payments.

Removing a collection account. Paying your collection account probably won’t improve your score. Instead, try to negotiate with the servicer for a “pay to delete” — and remember to get it in writing.

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"I wanted to let you know your service was quite helpful to me. I was able to do a refinance on my mortgage a few months ago with very good terms. My score has gone from 687 to 743. Thanks for your help!